Ramblings, rantings, ideas and opinions, from a man who has many, about the politics of craft beer and the craft beer industry

Friday, November 23, 2012

Prospect of Bigger Bucks Changing BC Craft Beer Community

Yesterday, Vancouver beer blogger, Barley Mowat, exposed one of the worst kept secrets in the local craft beer community when he wrote his post "The Grinch Who Stole Cascadia" outlining how Steamworks owner, Eli Gershkovitch, has been flexing his legal muscles in regards to a trademark involving the word Cascadia. I am not going to write more on the subject as Barley has it more than covered. I will say that the whole situation has been bothering me since I found out about it early last summer when a sales manager for a local craft brewery mentioned they had been contacted by Eli about not using "Cascadian" Dark Ale due to the Cascadia trademark. It has also bothered most others in the know, including some associated with Steamworks, because actions like this are historically not representative of the local craft beer industry.But I believe times, they are changing and this situation shows just how much the local craft beer scene has transformed and how the once tight "craft beer community" is slowly being attacked and splintered as the financial rewards get bigger due to the growing craft beer market and increased competition for those dollars. According to the latest Liquor Distribution Branch Quarterly Market Review, BC's domestic beer sales, from Sept/11 to Sept/12, were in excess of $900 million dollars, making each percentage point in the market worth $9 million dollars. Breweries, especially those with a business plan to grow, will fight hard for those dollars and some, not all, will fight dirty if they get the chance and think they can get away with it.With these types of dollars at stake and with the increasing market share being claimed by smaller craft breweries, this American-style of legal action is going to become more of the norm than the exception as the competition gets more heated with more breweries, both local and outside BC entering the local craft beer market. In recent weeks I have come across information about a few other local craft breweries that have been threatened with legal action for reasons that can be viewed as suspect, at best. In one case, an Ontario-based brewery, who are currently expanding into the BC market, hit a local craft brewery with a Cease and Desist order. For various reasons, I cannot comment more, but I see this as a sign of the fierce battles being waged over limited shelf and tap space for craft beer. I have also heard that one of the major craft breweries in BC is under attack from the major national breweries regarding possible trademark "infringements". I reached out to the local brewery representative to try to verify if this was true and was told that he "couldn't really comment on that stuff right now," which tells me that there is probably truth to these rumours.These are not American breweries protecting their turf south of the 49th as was the case with the ridiculous Red Racer-Racer 5-Red Rocket legal battle which somehow Central City Brewery lost. These are Canadian breweries attacking each other over what I see as trivial matters that are motivated by trying to impede the competition, to gain an upper hand in the market and not by actual issues that are damaging those taking action or by wrong-doing by those being hit by these legal actions. I can see, but don't agree with, the motivation for the bigger breweries to try to squash the once-insignificant-now-annoying bug that is the craft beer industry, but I find it very disturbing to see small Canadian breweries attacking one another and even more disturbing see one local craft brewery go after several other local craft breweries for questionable reasons.When I started working in the local craft beer industry 12 years ago, there were very few breweries in BC producing craft beer and we, for the most part,helped each other out as much as possible. I can remember one incident where I went to an establishment to hook up a tap for Storm Brewing but stopped because the licensee wanted me to disconnect a Russell Brother's tap. I actually refused to do it until we contacted Mark Russell, then owner of the brewery and informed him. As it turned out, he had been asked to cut a Storm tap somewhere else, so we "traded" taps, so to speak and had a good laugh over a pint of beer about the whole situation. But this was the norm, not the exception. Back in "the olden days" we helped each other find accounts, spread the wealth and let the beers fight it out in the market place with the consumer deciding which beer was tastier.Today, the industry is completely different animal. Craft breweries are now, except for a few hold-outs who only keg their beers, concentrating on bottled and packaged products. Flashy packaging and marketing are often just as important for some breweries than the product. Brewers are not always the owners and not always making the decisions as to what to brew and as to whether the product is ready to go to market or not. Craft breweries now have sales representatives, marketing personnel and PR folks where as in the past, many craft breweries were basically one-man shows with the owners acting as brewers, delivery drivers, and general brewery gophers. On more than one occasion, brewery owners were known to live in their breweries to save money and they were the face of their breweries as far as marketing went. The craft brewing industry was a lifestyle as much as a business. The idea of taking legal action against another craft brewery was unthinkable.To survive, the industry has evolved and as the industry has grown and the fight for the lucrative consumer dollars in a tough market has intensified, accountants and lawyers have become just as important as the brewers in some cases. I, for one, am not surprised by stories like the one Barley Mowat posted. I think it is only going to get nastier as trade practice and tied house laws get relaxed and the larger breweries move in with wads of cash and attempt to buy up smaller, successful craft breweries and point-of-sale distribution. Long gone are the days I remember when one craft brewery refused to cut the line of another and being involved in industry was based on pure passion for great beer, not bottom-line profits at the end of the year. Let's hope as consumers, the focus remains on producing the best craft beer possible and not just on the bottom line.

4 comments:

Hey Paddy, yeah the business of craft brewers sharing the love doesn't exist anymore as they are seeing massive growth in the arena. I think especially in the last 2 years with your region the growth has been astronomical in terms of craft beer. Saw a tweet from augies earlier and what a tap array.

Largest issue I found out about was from Ballast Point with their Yellowtail IPA when they urged Casella Yellow Tail wines to cease and desist. The Cascadia name was one that was termed by Deschutes in Portland and they got in trouble by the rest of the community for trying to label the style. It doesn't surprise me that its more business style tactics now.

In Australia nobody is allowed to use the term 'UGG' boot for those boots we wore to the store for sunday papers made from sheeps wool. UGG was trademaked by a US company who protect their trademark vigilantly.

As you term the tap space is limited, as is shelf space, and the marketing gurus are now the ones selling beer. Were the ones that drink and blog about it, which is a healthy mix.

Seems to me that in the 'old days' of the late 80's and early 90's the trend was to get big enough to be bought out..... The one person living in the brewery trend actually came after this earlier period...

Actually there has been more than one owner that has resorted to living in his brewery. I was working in the industry at the turn of the century and camaraderie and good will was still alive and well, at least in Vancouver. I was referring got the "second wave" began with Storm, Russell Brother's, et al.And yes, a few did get bought out and that is when some of the BS started. And I am certain a few more brewery owners will be offered large amounts of cash for their breweries and I am sure some will cash in.

I think you touched on the heart of the matter when you talked about the business aspect of breweries. Some were started as labours of love but, realistically, most are started as a business because the brewers wanted to make a living doing what they love. And in order to make money, it has to be run like a business.

There are a lot of similarities to the restaurant industry in that some are run by people who genuinely love the food and the people. Some succeed, some fail. Then there are restaurants run by people who look only at costs, portions and getting people in and out as fast as possible with a lot of up-selling in between. Again, some succeed, some fail.

In CAMRA, I've only been an informed observer of craft brewing for, well, a lot longer than I would expect a gentleman to ask me, and there has always been a core of idealists trading ideas freely. The Craft Brewers Association in BC, however, tends to function like a corral of feral cats compared to what is happening in Washington and Oregon. We have tried on several occasions to hold events hosting visiting groups of craft brewers but getting our kids to play nice together always brought it to nought in short order.

My personal feeling is to concentrate on the beer, get good value for the money and keep an eye on the real enemy, the big producers of bottled urine precursor. They are the ones who will end up gaining from this kind of in-fighting among consumers and craft brewers.